1 year ago

UK Government Spending on SMEs Decreases

A recent British Chamber of Commerce press release states that only one in five pounds of direct Government public procurement spending is awarded to SMEs. But does this mean that UK Government spending on SMEs has decreased? What can your small business do to maintain your funding as your business grows? This article covers what the BCC press release means for SMEs and how we can help with small business funding.

The Key British Chamber of Commerce SME Press Release Data

The British Chamber of Commerce (BCC) press release (based on data gathered by Trusell) covers some intriguing facts on changes to the environment of SMEs from 2016 to 2021:

  • Spending on third-party goods, services, and works more than doubled, rising from £80bn to £181bn.

  • Direct public spending with SMEs nearly doubled, rising from £20bn to £38bn.

  • In 2021, just over 105,000 SMEs invoiced the wider public sector directly for a median annual amount of £32,000.

While this is promising news, what's not as positive is the decrease in Government SME spending. According to the BCC, 25% of public sector procurement spend was awarded directly to SMEs in 2016. By 2021, this figure had dropped to 21%, quite far behind the Department for International Trade (DIT) target of 33%.

SME packing boxes

Could Public Sector Procurement SME Spend Improve?

As DIT is still targeting a 33% public procurement spend on SMEs, it's possible that the situation will improve. However, with so much volatility in UK Government policy including the recent departure of Kwasi Kwarteng as Finance Minister, it's hard to predict how the UK Government will support SMEs moving forward. But even without Government support, there are other routes to SME funding.

Routes to SME Funding and Saving Cash

Whether your business is experiencing a decrease in UK Government SME spending or you just need more funding to grow, there are other routes to funding.

Unlock your Cash Flow with Invoice Finance

Unpaid invoices can cause a real problem with cash flow for SMEs, disrupting your plans and slowing down growth. Invoice financing is a way of unlocking the revenue tied up in unpaid invoices. Invoice finance is a form of asset-based finance that works by selling your invoices to an invoice finance company.

An invoice finance company provides you with funding minus their fee allowing you to use free-up cash to maintain and grow your SME. There are several different types of invoice financing, including factoring and invoice discounting.

Reduce your Business Energy Bills

While there are plenty of ways to reduce your business energy costs, many of which you may have already pursued, you might be able to reduce your energy bills by switching providers. There are many changes affecting energy costs at the moment, with the UK Government implementing the Energy Bill Relief Scheme to combat rising energy costs.

Subsequently, it's beneficial to compare energy costs to find the best fixed-price business energy contract. Whether you make small or substantial savings on your business energy, you could protect yourself from rising costs. By doing so, you allow your SME to grow unhindered by high energy bills.

Take Advantage of Lending to Grow your Business

Whether or not your business is directly affected by the decrease in public spending with SMEs, cash is usually a key component to growth. Sometimes, a loan is the best way to grow your business. A loan can allow you to weather a transition period or invest in an area of growing your business wouldn't be able to achieve without an extra boost.

Helping SMEs to Grow

At BusinessComparison, we specialise in helping SMEs compare products from a wide range of finance, energy, insurance, telecoms and payment service providers. Allowing you to spend time doing what matters; growing your business.


Jon Cole-Dalton